Buyer Possession Date Issues
I recently had a client igonre my advice and allow a Buyer to take possession a couple of days prior to the closing on the sale. Now, the sale has not closed and the Seller has a Tenant rather than a Buyer and they can not get the Tenant out of their home.
When you contract to sell your home you have to decide when to allow the Buyer to take possession of the home. The safest way to handle this is to refuse to allow the Buyer to take possession until both Closing and Funding have taken place. Funding takes anywhere from a few hours to a day or two to occur after the Closing has been completed. Because of the timing of transfering funds between the various lenders and the fact that weekends and holidays can delay the funding process it is wise to schedule closing to happen a day or two before any weekend or scheduled holiday where a bank or financial institution may be closed.
Some fundings fail to happen and until the funding has occurred the sale of the property has not been completed. In fact, there are many instances of the sale being 'undone' because the lender failed to fund after the closing had taken place. While it may be true that the Seller has some legal recourse to follow in such a situation the reality is that any such legal recourse takes time and during that time the home is not sold to the Buyer and the Seller should not give possession of the home to the Buyer.
Any time that you give possession of your home to a Buyer in advance of the closing and funding you are taking a risk. In the worst case situation the closing and funding may not happen and you will have taken the position of a Landlord in a Landlord-Tenant relationship. This imposes some rather significant restrictions on your rights as the owner of the property. When you have a Tenant you are required by law to grant certain rights and priviledges to the Tenant and if the Tenant should, for some reason, refuse to take proper care of your property or refuse to pay you the rental amount that you agreed upon then you must evict the Tenant. Eviction can take anywhere form 30 - 90 days, and in some cases longer. During that time you may suffer both significant financial cost in terms of lost income from the Tenant as well as damages to the property that further increase your costs for repairs and delay your ability to sell the property.
Buyer's can come up with any number of seemingly valid reasons for requesting that you allow them to take possession of your home prior to closing and funding. In some cases, such as where the wife is pregnant or a family member is handicapped, the Buyer's short term movement into an apartment or hotel can seem like an inordinant burdan for the Seller to impose on the Buyer just because of concerns about whether or not the Buyer would vacate the home if the worst case occurred. The emotional concerns can seem very real at the moment but in hindsight, when the worst has occurred, being a nice guy can backfire and cost you a bundle.
My advice... NEVER allow a Buyer to take possession of your home before both Closing and Funding have occurred. If you follow this advice you will never have to kick a Tenant out of your home.
When you contract to sell your home you have to decide when to allow the Buyer to take possession of the home. The safest way to handle this is to refuse to allow the Buyer to take possession until both Closing and Funding have taken place. Funding takes anywhere from a few hours to a day or two to occur after the Closing has been completed. Because of the timing of transfering funds between the various lenders and the fact that weekends and holidays can delay the funding process it is wise to schedule closing to happen a day or two before any weekend or scheduled holiday where a bank or financial institution may be closed.
Some fundings fail to happen and until the funding has occurred the sale of the property has not been completed. In fact, there are many instances of the sale being 'undone' because the lender failed to fund after the closing had taken place. While it may be true that the Seller has some legal recourse to follow in such a situation the reality is that any such legal recourse takes time and during that time the home is not sold to the Buyer and the Seller should not give possession of the home to the Buyer.
Any time that you give possession of your home to a Buyer in advance of the closing and funding you are taking a risk. In the worst case situation the closing and funding may not happen and you will have taken the position of a Landlord in a Landlord-Tenant relationship. This imposes some rather significant restrictions on your rights as the owner of the property. When you have a Tenant you are required by law to grant certain rights and priviledges to the Tenant and if the Tenant should, for some reason, refuse to take proper care of your property or refuse to pay you the rental amount that you agreed upon then you must evict the Tenant. Eviction can take anywhere form 30 - 90 days, and in some cases longer. During that time you may suffer both significant financial cost in terms of lost income from the Tenant as well as damages to the property that further increase your costs for repairs and delay your ability to sell the property.
Buyer's can come up with any number of seemingly valid reasons for requesting that you allow them to take possession of your home prior to closing and funding. In some cases, such as where the wife is pregnant or a family member is handicapped, the Buyer's short term movement into an apartment or hotel can seem like an inordinant burdan for the Seller to impose on the Buyer just because of concerns about whether or not the Buyer would vacate the home if the worst case occurred. The emotional concerns can seem very real at the moment but in hindsight, when the worst has occurred, being a nice guy can backfire and cost you a bundle.
My advice... NEVER allow a Buyer to take possession of your home before both Closing and Funding have occurred. If you follow this advice you will never have to kick a Tenant out of your home.
posted by DallasFlatFee at 6:47 AM
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